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Amaranth Says Losses May Top 35%

September 19, 2006|From Reuters

Amaranth Advisors' hedge fund said Monday that it might suffer billions of dollars in natural gas losses, becoming the latest hedge fund to be stung by energy price volatility this year.

The Connecticut-based company, which had more than $9 billion in capital under management, said year-to-date losses might top 35% as it liquidates its natural gas positions.

"Last week, the Amaranth multi-strategy funds experienced significant losses in their energy-related investments following a dramatic move in natural gas prices," Amaranth said in a letter to investors.

Amaranth added that it was "aggressively reducing" its natural gas exposure to preserve investor capital.

Energy futures have fallen sharply over the last month as growth in U.S. inventories of oil and natural gas eased supply concerns.

U.S. natural gas futures, which rose sharply last year after supply disruptions caused by hurricanes, have dropped more than 40% since early August.

"It looks like Amaranth went for the seasonal play on energy futures ... on natural gas, it looks like they bet on hurricane-related supply problems," a New York-based energy futures broker said.

Traders said Amaranth was selling as much as 2 billion euros ($2.5 billion) of European syndicated loans to help cover its natural gas positions.

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